Within the next couple of years, Fairfax County residents and visitors could be paying more to eat out, attend events, stay at hotels and settle the estates of loved ones.
County officials, at the Board of Supervisors’ request, outlined for the board’s Budget Committee Sept. 17 several potential revenue-diversification enhancements worth an estimated $225.6 million per year that could be realized following passage of recent General Assembly legislation.
The rationale for the revenue-enhancement query was that the county needs to depend less on real-estate taxes.
In fiscal year 2025, real-estate-tax revenues make up 65.7 percent of Fairfax County’s $5.44 billion general-fund budget. Residential properties contribute more than 75 percent of that real-estate-tax base.
“We’ve got to find ways to diversify our tax structure locally,” said Supervisor Walter Alcorn (D-Hunter Mill).
In 2020, when Virginia’s legislative, judicial and executive branches all were in Democratic hands, the General Assembly passed several measures that enabled counties to:
• Charge transient-occupancy taxes of more than 2 percent.
• Impose a meals tax on food and beverages of up to 6 percent without having to receive approval from voters first. (Cities, towns and a few counties already had that authority.)
• Levy an up-to-10-percent admissions tax for events.
• Charge cigarette taxes of up to 40 cents per pack. (Some cities and towns with higher cigarette taxes as of Jan. 1, 2020, were allowed to continue those rates.) Fairfax County raised its cigarette-tax rate from 30 to 40 cents per pack staring in fiscal 2025, so the board did not discuss this revenue stream at the meeting.
Fairfax County also could reap about $360,000 per year by charging a probate tax, which is levied on estates. Arlington and Loudoun counties and the city of Falls Church levy probate taxes, as does the state government, which charges 10 cents per $100 assessed value.
If Fairfax County had taken full advantage of its taxing opportunities in fiscal 2025 – i.e., charging a 6-percent meals tax, raising the transient-occupancy tax to 7 percent, and levying a 10-percent admissions tax and probate tax of 3.3 cents per $100 of assessed value – it likely would have raked in $225.6 million in additional revenues, said Philip Hagen, director of the county’s Department of Management and Budget. That amount equates to about 7 cents on the real-estate-tax rate.
The county could realize about $198 million per year from the meals tax alone. About one-third of that would be raised from people visiting the county, an advantage backers were quick to tout.
Many nearby jurisdictions charge such a tax – ranging from 3 percent in the town of Vienna to 10 percent in Washington, D.C. – but Fairfax County voters by overwhelming margins defeated meals-tax proposals during a 1992 special election and the 2016 general election.
County staff recommended July 1, 2025, as the earliest implementation date for a probate tax and increased transient-occupancy tax. Staff’s earliest recommended implementation date for meals and admissions taxes was Jan. 1, 2026.
Some supervisors stressed that the revenue-diversification discussion was just exploratory and would be followed with plenty of public input.
If the board chose to pursue the various revenue-enhancement options, county staff would conduct a public-outreach program to give residents and industry members the rationale for the increases, said county spokesman Anthony Castrilli.
The outreach campaign would have a common message delivered by many voices, he said.
Supervisor Patrick Herrity (R-Springfield) said the public-relations element amounted to a “sales job.”
“It doesn’t talk about how we’re going to go out and receive information,” he said. “It’s all about how we’re going to sell these taxes to our residents. It’s not about getting the impact from our residents and our businesses.”
Board of Supervisors Chairman Jeff McKay said the tax increases being pondered amounted to a small fraction of the county’s budget.
“If we were to implement everything here – which we’re not going to do, but if we were going to implement everything here to the maximum extent possible – that represents 4 percent of our general-fund revenue,” McKay said.
